Angry holidaymakers are waiting months for payouts from Axa, Britain’s biggest travel insurer, which admitted last week its claims process is not up to scratch.

Axa has a 31% share of the travel-insurance market and underwrites many household names, including Thomas Cook, Egg, Marks & Spencer, MBNA and Lloyds TSB Travel Account.

Sunday Times Money has been inundated with letters from readers struggling to get a payout, and last week a company whistleblower, who did not want to be named, admitted there was a problem. He said: “There is a general clunkiness to the claims process at the moment which we are trying to resolve. One way of doing this is to bring the claims-handling in house.”

Axa has been bringing its claims handling in house since the beginning of the year. “With outsourced firms there is a tendency to pass things higher up the chain to resolve things,” the whistleblower said.

Janet Mills, 42, from London, had to wait three months for a payout. She had booked flights to Turkey to attend her brother’s wedding, but the event was cancelled after the bride fell ill.

“We tried to claim back £700 for the cancelled flights, but Axa said as we were not yet related to the bride we could not make a claim.”

However, her sister managed to get the cost of her flights refunded. Mills had to argue for three months before Axa backed down. “It shouldn’t have to take that long. I don’t understand why they paid out for my sister so easily.”

Axa admitted a review of the firm’s terms and conditions was “overdue”. It said: “There are many industry standards which probably need reviewing. We are attempting to make the process more customer friendly.

“We are handling more claims within the Axa group to improve our services and to make sure our reputation is not diminished by poor service.”

Latest figures from the Financial Ombudsman Service show that 40% of travel insurance disputes are upheld, slightly above the average of 33% for all insurance.

The FOS said travel insurers are still making exclusions too difficult to understand. It said: “The wording on policy documents needs to be improved. At the moment it is far too complicated and many travellers are unaware of what they are and aren’t covered for.”

Many have fallen foul of Axa’s small print. Anthony Woods, 21, from Teesside, lost €600 (£420) from his bag after he placed it on a train rack in Germany. “I was told to place the bag there and it was within arm’s reach,” he said. Axa refused to pay because the bag had been left “unattended”.

Steve Kemp, 52 from Lincoln, had to pay £1,700 for his family’s flights back to Britain from the Caribbean after a connecting flight was delayed. Axa refused to reimburse him because the Kemps had started their “international flight”.

Their insurance policy says it covers delays on public transport only. “In the Caribbean, things are different – their local flight to the main airport is more like public transport than an international flight,” said Kemp.

Rod Heap and his wife Anne, from Essex, had to cut short their South African holiday after Rod tore a muscle in his leg. Although a doctor told him and Axa he could fly back home in two weeks, he was advised that he should wait at least four weeks before doing so.

Axa paid for a flight after two weeks, but Heap refused it on doctor’s advice, resulting in his policy being cancelled.

Lloyds TSB, which sold the policy, said: “Mr Heap chose to travel back after the recommended date so the terms of his policy changed. We were not able to provide further cover.”

Sunday Times Money reported this month how holiday insurers were becoming increasingly reluctant to pay out on claims amid a squeeze in profits.

Norwich Union, Britain’s largest insurer, said it expected to pay out 6% more this year than it did in 2006 when it paid over £43.5m on travel claims.

Lost baggage claims have rocketed in the past six months, with one insurer, Insureandgo, reporting an 85% increase while Norwich Union saw a 40% rise over the same period.

TIPS TO GET YOUR MONEY BACK

- Keep receipts for items you want to claim for, such as medical bills, prescriptions or anything you had to buy because baggage was lost, stolen or delayed.
- If belongings are lost or stolen, a police report must be obtained for your insurer as soon as possible – usually within 24 hours.
- Don’t be deterred if a claim is turned down or not paid in full. Complain to the company in writing and, if it doesn’t resolve your complaint, go to the Financial Ombudsman Service - 40% of claims are upheld.

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